REBUILDING OF HOTEL

New Zealand Herald, Volume LXIX, Issue 21328, 1 November 1932, Page 11

REBUILDING OF HOTEL

FINANCING AT NAPIER EXPLANATION OF MORTGAGES STATEMENT FOR COMPANY [BY TELEGRAPH —PRESS ASSOCIATION] NAPIER, Monday The following statement concerning the financing of the rebuilding of the Masonic Hotel at Napier has been issued by Mr. G. Ebbett, of Hastings, managing director of the company owning the hotel: — I have read statements made in Parliament and elsewhere publicly relative to the finance for the re-erection of the Masonic Hotel. I take them as having been reported correctly, and the three following statements call for some comment:—(lj The Public Trustee lent £15,000 on second mortgage of the property; (2) the State Advances Superintendent lent £21,000 on first mortgage of the property; (3) the Unemployment Board lent £BOOO on third mortgage of the same property. I take the first two together. As they stand, both are utterly wrong and most unjust, and constitute a very grave reflection on the Public Trustee and State Advances Superintendent, and on the administration of their respective departments. Position before Earthquake The Public Trustee, in the in which this statement is made, never at any time lent £15,000 or any other sum on second mortgage of this property. Prior to the earthquake he lent £40,000 on first mortgage of a property worth at that time £IOO,OOO, and he took good care to satisfy himself he well secured. When the earthquake destroyed the building, he received £25,000 earthquake insurance, leaving him with a first mortgage of £15,000. When the Rehabilitation Committee lent £21,000 to help re-erect the building, his became a second mortgage by law, whether he agreed or not. The State Advances Superintendent, as such, never at any time lent any money on the security of this property. When the Treasury, on the recommendation of the Rehabilitation Committee, made the advance to help the rebuilding, it was arranged that the mortgage, in common with all other similar mortgages, should be taken by the superintendent as a matter of expediency. To infer that any settler or farmer or anybody else was deprived of even as much as one pound which he would otherwise have got is simply ludicrous. It is raised in complete ignorance of the facts. Endeavour to Find Money With reference to No. 3 statement, there is some element of truth in this, but to make the bare statement without disclosing the facts bearing on it is unjust and most unfair to the Unemployment Board. After the earthquake the company was left with the site and a heap of ruins subject to a mortgage of £15,000, and at a time when even easy finance was impossible. Practically the whole of the company's property was absolutely destroyed. A big majority of the shareholders suffered ruinous losses besides and could do nothing to help themselves. The Rehabilitation Committee offered to lend £21,000, which made the mortgage liability £36,000. The building could not be erected under £40,000. We combed the Dominion to get the necessary additional money, without effect. We tried to sell the site for anything, with the same result. The directors then determined to drop the whole thing, to recommend liquidation and abandon the site to the Public Trustee, and it was left to me to fix a date of a general meeting of shareholders for this purpose. Before that was done the chairman and deputy-chairman of the Unemployment Board visited Napier, but not at our request. The position was then this. Twelve months had gone by since the earthquake. With some two or three exceptions no attempt had been made to rebuild Napier, and there was no sign of any such attempt. Many had serious dcubts whether it would ever be rebuilt, and the reason everybody thought he knew. The Masonic was considered to be the centre, the pivot, round which everything r-evolved and the key to the whole position. Until it was commenced nobody else would commence, but let it once be begun and the whole atmosphere' would be changed. Subsequent happenings have well proved this to be right, and to-day it is there for anybody to see. Meeting with Directors The members of the boajrd met the directors. "What is being done about the Masonic?" they asked. "Wo are abandoning it," we said, "we haven't the necessary money, we can't provide it and we can't get it." They said: "Well, there are many hundreds of thousands of pounds worth of work h'ere and there are hundreds of unemployed. We want to get these idle men into some useful work, but from our own observation on the spot and from the information we have we are convinced nothing will bo done until the Masonic is commenced." I replied: "We are well aware of that, but wo can't help it. It would be stupid to commence unless we could see our way through, and we can't do that without at least another £8000." They said: "It is our function to promote employment. We can't go outside it, but if by some means wo could get all this work commenced and at the same time help to start rehabilitation in Napier, wo would consider it. -Can you guarantee that £BOOO will be spent in wages? We can't find money for anything else." We gave that assurance. As a matter of fact, the total wages paid to date is more than £16,000. Subsequently the board agreed to lend £BOOO on third mortgage and on the condition that with the exception of a certain few specially skilled men, the whole of the labour should be drawn from the unemployed register in Napier. We think wo were hardly treated, because wo have to pay the £BOOO, and had things been hung up for another month, we should have got the biggest part of it in subsidy for nothing. If there had been no Unemployment Board loan, the Masonic site in all probability would havo been a heap of ruins to-cfay.